By: Christine M. Costantino

Seyfarth Synopsis: In what could become a trend, Judge T.S. Ellis, III recently broke with other courts in the Eastern District of Virginia when he rejected the two-step conditional certification process commonly used in FLSA collective actions and endorsed the one-step process and rationale outlined in 2021 by the Fifth Circuit in Swales v. KLLM Transp. Servs., LLC.

Employers have long been subject to a two-step “certification” process when facing putative collective claims under the FLSA.  This two-step process, established by the District of New Jersey’s 1987 decision in Lusardi v. Xerox Corp., permits court-authorized notice to be sent to an initial, “conditionally certified” group of individuals based on allegations that the individuals were subject to a single decision, policy or plan by an employer.  Employers may then move for “decertification” of the collective after the completion of discovery.  As a result, employers are frequently forced to incur the time and expense of discovery on a collective basis or explore resolution with individuals who may not, in fact, be similarly situated to the named plaintiff(s), regardless of the merit of the underlying claims.

In 2021, the Fifth Circuit undermined the validity of the two-step “conditional certification” process in Swales v. KLLM Transp. Servs., LLC, reasoning that a one-step certification process after targeted discovery better served the text of the FLSA.  The issue has not been squarely addressed by the Fourth Circuit and, until recently, district courts within the Fourth Circuit routinely elected to maintain the two-step process created by Lusardi and its progeny.  On April 14, 2023, however, a federal judge in the Fourth Circuit has now similarly rejected the two-step “conditional certification” process and endorsed the reasoning in Swales

In Mathews v. USA Today Sports Media Group, et al., the named plaintiff alleges that she and other “site editors” were misclassified as independent contractors rather than employees and not paid owed overtime.  The plaintiff filed a motion for conditional certification the day after the defendants filed their answer to the complaint.  Judge Ellis denied plaintiff’s pre-discovery motion for conditional certification and ordered the parties to engage in threshold discovery on the facts and legal issues material to the question of whether the named plaintiff is “similarly situated” to the putative collective. 

Judge Ellis observed that the FLSA does not provide for the “conditional certification” procedure.  Rather, the text of the FLSA permits the provision of notice only to those who are “similarly situated” to the named plaintiff(s).  On that basis, the court reasoned that the two-step certification framework established in Lusardi is inherently flawed.  The broad provision of notice to “potential” collective members at step one “commonly” results in notice being sent to at least some individuals who are not “similarly situated” to the named plaintiff(s).  In other words, the Lusardi framework often results in distribution of notices that are not authorized by the FLSA.

Judge Ellis thus found that the “correct approach” must be one that is authorized by the FLSA’s text and sends notice only to those individuals who are “similarly situated.”  Therefore, courts should determine at the outset of the case – not at the close of discovery – whether the individuals in the proposed collective are similarly situated to the named plaintiff.  Judge Ellis’ reasoning would permit employers to request and Courts to require discovery to determine the threshold issues relating to any collective designation and provide for a one-step process to identify any collective before notice is authorized or distributed.

Although it remains to be seen whether other judges will revisit their position on Lusardi (the Sixth Circuit Court of Appeals currently is deliberating on whether to do so in Clark v. A&L Care & Training Center, LLC), this decision provides employers further ammunition to push back against the “conditional certification” process and insist on a one-step collective designation process.